China is improving its infrastructure for long-distance power trading, “but it’s definitely not where it needs to be”, he added.
Coal also benefits from being a “dispatchable resource” – easily ramped up or down – unlike solar and wind, which depend on weather.
To increase renewables, “you have to make the coal plants operate more flexibly … and make space for variable renewables,” Myllyvirta said.
China’s grid remains “very rigid”, and coal-fired power plants are “the beneficiaries”, he added.
‘INSTRUMENTAL’ ECONOMIC DRIVERÂ
Other challenges loom. The end of feed-in tariffs means new renewable projects must compete on the open market.
Fishman argues that “green power demand is insufficient to keep capacity expansion high”, though the government has policy levers to tip the balance, including requiring companies to use more renewables.
China wants 3,600 gigawatts of wind and solar by 2035, but that may not meet future demand, risking further coal increases.
Still, coal additions do not always equal coal emissions – China’s fleet currently runs at only 50 per cent capacity.
And the “clean energy” sector – including solar, wind, nuclear, hydropower, storage and EVs – is a major economic driver.
CREA estimates it contributed a record 10 per cent to China’s gross domestic product last year, and drove a quarter of growth.
“It has become completely instrumental to meeting economic targets,” said Myllyvirta.
“That’s the main reason I’m cautiously optimistic in spite of these challenges.”